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Negative externalities of close guanxi within organizations

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Abstract

In this conceptual article we present a critical analysis of close guanxi, i.e., close personal connections, in terms of their negative externalities on organizations. We adopt a social dilemma perspective and examine how close guanxi parties, while cooperative toward each other, may nevertheless defect against the organization, causing negative externalities. We contend that relationalism exacerbates such negative effects of close guanxi and propose various institutional mechanisms and individual variables that can reduce them. Finally, we discuss research and practical implications of solving social dilemmas of close guanxi in Chinese organizations and strong ties in Western organizations.

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Authors and Affiliations

  1. Rutgers University, 111 Washington Street, Newark, NJ, 07102, USA

    Chao C. Chen

  2. Department of Management and Organization, Michael G. Foster School of Business, University of Washington, Box 353200, Seattle, WA, 98195-3200, USA

    Xiao-Ping Chen

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  1. Chao C. Chen
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  2. Xiao-Ping Chen
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Correspondence to Chao C. Chen.

Additional information

The authors greatly appreciate comments from Yanjie Bian, Marilynn Brewer, Mike Peng, Denise Rousseau, and Dave Whetten on an earlier version of this paper.

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Chen, C.C., Chen, XP. Negative externalities of close guanxi within organizations. Asia Pac J Manag 26, 37–53 (2009). https://doi.org/10.1007/s10490-007-9079-7

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